Pages

Tuesday, 9 May 2017

(The Star) CIMB Research retains ‘overweight’ rating on construction sector

KUALA LUMPUR: Despite the fallout from Bandar Malaysia and the implications for China-driven contracts, CIMB Research remains optimistic about the job awards from the RM50bil East Coast Rail Line (ECRL) and the RM9bil Gemas-Johor Baru double-tracking project that are long overdue.

The research house said other China-backed jobs were intact and retained its “overweight” on the construction sector.

“We understood earlier that the forgone RM7.4bil injection of funds (from sale of the 60% stake) would fast-track the execution of phase 1.

“Phase 1, primarily consisting of the transport hub (and the KL terminus of the HSR project) was initially slated for launch this year. On the infra side, the latest news from MyHSR highlighted 1Q18 as the new timeline for HSR’s civil works tenders,” it said.

CIMB said it understood from management that MRCB’s MoU with Wondrous Vista, signed in June 2016, to explore opportunities to develop an integrated transport hub in Bandar Malaysia remained valid.

In late January 2017, MRCB announced that it intended to form a strategic alliance with Wondrous Vista and Bandar Malaysia Sdn Bhd to acquire, construct, develop and operate the transport hub.

Over the weekend, local newspapers covered several “what if” scenarios following the termination of the share sale agreement (SSA) of the 60% stake in Bandar Malaysia to IWH-CREC consortium.

Developer TRX City recently said that a new tender for the Bandar Malaysia masterplan will be launched.

“On the surface, this may turn out similarly to the parceled tenders by Kwasa Land for the RRI land in Sungai Buloh. We expect more news from TRX City in coming weeks,” CMB said.

StarBiz reported that there was talk of Dalian Wanda Group of China bidding for the Bandar Malaysia project together with Malton Group, headed by Tan Sri Desmond Lim, who is also the new major shareholder and executive chairman of WCT.

According to sources in Starbiz, there is also the possibility that the Employees Provident Fund would take part in the group/consortium.

“We note that Lim was one of the major contenders for the Bandar Malaysia deal. It was reported in 2015 that Lim together with a Qatari state-backed consortium and IWH-CREC were the two frontrunners for the Bandar Malaysia deal,” CIMB said.